On Friday, the Department of Education sent a letter terminating agreements that were enacted in 2011 and 2014, during the Obama administration, which allowed the Consumer Financial Protection Bureau (CFPB) to oversee student loan fraud.
The letter accused the CFPB of using the Education Department’s data “to expand its jurisdiction into areas that Congress never envisioned,” and said their actions were “characteristic of an overreaching and unaccountable agency.”
The two original “Memorandum of Understanding” (MOU) agreements between the Bureau of Consumer Financial Protection and the U.S. Department of Education were the “Sharing MOU,” which originated on Oct. 19, 2011, and the “Supervisory MOU,” which originated on Jan. 9, 2014.
Both are being terminated thirty days from the date of the letter, as the Education Department stated the Bureau has violated the terms of the original agreement, which held that all complaints related to Title IV federal student loans were to be directed to the Education Department within 10 days of receipt. Instead, the Education Department said the CFPB has simply handled the complaints on its own and has overstepped its bounds.
Kathleen Smith, the acting assistant secretary for postsecondary education, wrote, “Our goals are to ease the burden for borrowers and to enhance the efficiencies of our servicers — not to complicate the federal student loan process with potentially inaccurate and inconsistent directives. The department entered into the [memorandums of understanding] in reliance on the CFPB’s commitment to helping each agency fulfill its respective duties. Instead, the CFPB is using the department’s data to expand its jurisdiction into areas that Congress never envisioned.”
Rep. Virginia Foxx (R-N.C.) approved DeVos’ decision, saying, “Congress bestowed the powers to oversee student loans and student loan servicing solely to the Department of Education, and it was a mistake for the Obama administration to have the Department of Education let the CFPB abuse its privilege on these matters.”
The Hill noted that “The department recently revoked Obama-era protections for victims of student loan servicing fraud, and appointed a former DeVry University official to lead Education’s enforcement division. That office previously fined DeVry and other for-profit colleges hundreds of millions of dollars for defrauding and lying to students.”
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